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Market Ripe for New Breed of MVNO

Mobile Virtual Network Operators (MVNOs) are in a second phase of growth, made possible by the advent of 3G mobile phone services. 3G's data-centric capabilities have opened up new markets for MVNOs targeting specific high-end subscriber groups. With CAPEX and running costs far lower than those of the facilities-based operators whose networks they use, MVNOs can succeed with far fewer subscribers.

In the past MVNO markets were dominated by low-cost providers buying wireless access wholesale and reselling it under their own brand names, offering plans aimed at a low-cost customer's needs. Now 3G allows MVNOs to offer more than just low cost: data services that may not be available from the mainstream, facilities-based operators.

Tier 1 operators focus on the broad customer segment that mainly wants voice and SMS and may send the occasional picture, but is less interested in things like 3D gaming or broadband video. "These new MVNOs recognize a market segment that is ripe for them, where they can provision their own data and content targeted not to a mass-market but to a small segment," says Kenneth Hyers, ABI Research's principal analyst of global wireless operator research.

"That might be kids playing 3D real-time games, or somebody that just has to have the latest device from South Korea. Or someone wanting continual sports updates from Mobile ESPN. Or adult content." The US will continue to be the most successful single market for MVNOs, Hyers says. However in absolute terms, by the end of this decade Europe will have more MVNO customers than the US.

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